Pan African food producer Agriterra's (LON:AGTA) recent expansion of its cocoa farming efforts is a good example of the firm's current focus on investment, now in full swing.

The firm is looking to build the foundation on which it grows and is pumping resources and funds into its core operations.

From initially building what was primarily a cocoa trading business, it now has bought its own 1,200 hectare plantation in Sierra Leone and last month, unveiled a large scale acceleration of efforts.

Clearing the site is ongoing and Agriterra expects to have planted the whole 1,200 hectare by the fourth quarter of next year.

Meanwhile, subsidiary Tropical Foods is in "advanced" negotiations to try and get its hands on a further 1,600 hectares north east of the current site to allow planting in 2016 and an additional 1,550 hectares to the south-east, which will be earmarked for coffee.

To support the plantation's development, a new cocoa nursery is also being planned.

Agriterra's chief executive Andrew Groves tells Proactive the aim is to secure 6,000 hectares in the next three years and is in no doubt that the scheme bolsters the group's long term position.

"We are now the largest agri business in Mozambique - with the milling and the beef. We wanted to expand into something, which over time has good long term cash flow, which is cocoa," he says.

"We can forward sell it. There's a massive off-take market and if you have your own plantation, it's like an annuity from a cash flow point of view."

The plantation gives the firm secure cash flow in the next three-four years, he adds.

And the timing couldn't be better. The company pointed out in its last statement that the International Cocoa Organisation forecasts demand for cocoa will exceed production by 45,000 tonnes in the season to September 2013. 

Agriterra's expansion strategy into its core revenue generating businesses of cocoa, beef and maize was also given a shot in the arm earlier this year - with a US$28 million payout.

It came from Marathon Oil Corporation after the sale of Agriterra's 20% legacy interest in the South Omo oil block in Ethiopia and leaves the firm in the enviable position of having no debt and a growing asset base - its net asset value now stands at US$64.5 mln.

Meanwhile, its Mozbife operation in Mozambique is making great strides and is now eyeing a national chain of butchers shops servicing its expanding cattle herd - which aims to have a head count of 10,000 by 2015.

The firm has now a finished abattoir in Chimoio and to boost its margins, has opened two shops - one in Chimoio and one in Tete selling beef produce.

Another four retail units are scheduled to open this year, Groves tells Proactive, while the firm is hoping to roll out 20 butchers shops across the country, which should really boost the group's top line.

The third revenue stream - the group's maize and milling operation - is also doing well.

It saw improved revenues in 2012 after reduced sales in 2011 after a strong harvest reduced demand.

For the six months to November 30 last year, the group saw revenue from continuing operations shoot up to US$11.49mln from US$5.29mln the year before, with revenue for the year to May 31, 2012 coming in at around US$13 million.

And Groves is confident that 2013 results will tell the same story.

"I think we are extremely  undervalued. We've got no debt. We've got a huge asset base and business is growing," he added.

The chief executive also pointed out that as Africa itself grows on the world stage, economically and socially,Agriterra could not be in a better place to capitalise.

"If you look at the rest of the world, there's a declining economy whereas if you look at the African states, it's different. Mozambique's pushing 11/12% growth, Sierra Leone's got huge growth, most of them have (the states)- and it's not leveraged growth - it's cash growth, which makes a big difference.

"I think it's the place to be. You've got a fast-growing consumer market and it keeps increasing," he says, also highlighting the oil and gas discovered in Mozambique along with coal.

"In the last ten years, Africa has changed completely and I think Agriterra's a good foundation to capitalise on that."

To that end, Groves says the company is always on the lookout for further acquisitions, though nothing has as yet come "across the radar".

"We'd look at further acquisitions but they've got to be earnings accretive. We're not going to go into too much greenfield stuff where we've got to plough $10/$20 mln into greenfield business but if we can buy an earnings-accretive business and finance it with cheap debt we'd probably look at doing that."

So there is much to look forward to as Agriterra continues to grow and furthers its reach into Africa's food production business.

The firm expects to have fully planted the 1,200 hectare site, acquired in February this year, by the end of the fourth quarter of 2014 and has bought further land on top, it told investors.

So far, the group's subsidiary Tropical Farms (TFL) has cleared 200 hectares of the site 40 kilometres from Kenema, the country’s third-largest city, ahead of planting in the second quarter of  2013.

TFL expects the remaining land to be cleared by the end of the fourth quarter this year and plant the whole site by the end of the fourth quarter next year.

In addition, TFL has recently acquired a further 400 hectares contiguous to the north-east of the plantation, which the group plans to begin clearing in 2014 to plant cocoa seedlings in 2015.

Furthermore, TFL is in advanced negotiations to acquire an additional 1,600 hectares north east of the current site. TFL intends to clear this new land in 2015 to allow cocoa planting in 2016.

Agriterra is also in discussions to acquire a further 1,550 hectares to the south-east of the plantation potentially earmarked for coffee growing.

To support the plantation's development, a new cocoa nursery is also being planned, the firm said.

Construction is be completed by the first quarter of 2014, enabling the cultivation of up to one million seedlings for planting across 1,000 hectares in 2014.

TFL is also focused on improving local infrastructure, including improving the roads that connect the plantation to Kenema and beginning preparation for a 2,000 square metre warehouse.

The firm's chief executive Andrew Groves said: "The expansion of the plantation underpins TFL's efforts to become a leading agricultural producer, in addition to its established cocoa trading business.

"The forward pricing environment for cocoa is positive, with the International Cocoa Organisation forecasting that demand is expected to exceed production by 45,000 tonnes in the season to September 2013."

The pan-African operator is investing heavily in its revenue generating divisions and infrastructure to ensure scalability, and figures for the six months to the end of November indicate this investment is already starting to bear fruit.

Revenue from continuing operations shot up to US$11.49mln from US$5.29mln the year before.

Loss before tax widened to US$4.19mln from US$3.48mln the year before, as operating expenses increased to US$5.71mln from US$3.58mln the year before, reflecting the fact that Agriterra is currently focused on expansion.

The group booked a US$29.36bn profit on discontinued operations, namely its legacy oil and gas assets.

Buoyed by this contribution, earnings per share were positive at 2.4 cents, compared to a loss per share of 0.4 cents the year before. The loss per share from continuing operations narrowed to 0.4 cents from 0.5 cents at the interim stage last year.

Net assets soared to US$64.46mln from US$25.04mln the previous year, principally due to a large increase in the value of property, plant & equipment – up to US$27.38mln from US$17.28mln – and a sharp uplift in trade and other receivables – up to US$45.35mln from US$2.25mln.

The group is free of debt and had a cash balance at the end of the reporting period of US$3.2mln, up from US$1.0mln a year earlier. Subsequent to the period covered by the interim results, the group has received US$28mln from the sale of its remaining interest in the oil and gas asset in Ethiopia.

“Our strong cash position will allow us to fund our growth strategy without dilution which I believe marks us out amongst our peers,” claimed Phil Edmonds, chairman of Agriterra.

Andrew Groves, the group’s chief executive, highlighted one major expected impact from the group's investment programme, as he said, “Our beef business margins going forward will rapidly widen as we roll out our distribution hub and retail units, maximising the potential of our newly established integrated beef operation."

"Furthermore," he added, "with a solid foundation in place for long term growth at our cocoa operations in Sierra Leone, and record milling at our grain facilities in Mozambique, Agriterra looks set for strong and sustainable growth.

The shares were up 2.2% at 3.34p in the first hour of trading following the results.

Agricultural group Agriterra (LON:AGTA) has opened a second beef retail unit in Mozambique to help boost margins throughout its integrated beef business.

The new unit, in Tete in Mozambique, will be supplied by Agriterra’s abattoir at Chimoio, which opened in December.

A first beef retail unit opened in December also at Chimoio and is performing well, said Agriterra.

Cattle for both units are being supplied from Agriterra’s ranches at Mavonde and Dombe, the feedlots at Vanduzi and the local community.

Another four retail units are scheduled to open in 2013.

Euan Kay, executive director said: "With the roll out of our beef retail units now underway, the margins from our beef operations will improve significantly.

“Our ranches continue to grow both in terms of land size and head count, our herd now standing at 5,650 head, and the abattoir at Chimoio is benefiting both our business and the local community.“

African agricultural company Agriterra (LON:AGTA) has received an initial US$28mln from Marathon Oil after handing over its 20% stake in the South Omo Block in Ethiopia to the US oil giant.

The remaining US$12mln payable to Agriterra has been lodged with the Ethiopian government for tax purposes.

Agriterra will get a final US$10 million following a commercial oil discovery.

Chief executive Andrew Groves said: “I would like to take this opportunity to thank all parties involved in the completion of the sale of South Omo, in particular, the government of Ethiopia, Marathon Oil, and our partners in the block, Tullow Oil (LON:TLW) and Africa Oil.

“This injection of capital into our business, representing approximately 50% of our market capitalisation, will facilitate our rapid expansion plans across all our agricultural divisions, enabling the group to become a significant pan-African food producer and processor.”

Agriterra will use the cash to fund a strategy of becoming a leading sub-Saharan food provider.

It currently has four key divisions: cattle ranching, maize farming and milling, cocoa trading and palm oil.

‘Yes, we have some bananas,’ is the cry at Agriterra (LON:AGTA), which has bought a 2,500 hectare farm which includes a 50 acre banana plantation.

The banana plantation is currently producing weekly yields of around seven tonnes, but production is expected to increase significantly under Agriterra's ownership.

The African agriculture firm said the farm, which is situated some 25 kilometres north of its Mavonde stud ranch in central Mozambique, also has a macadamia orchard and land capacity for cattle.

The macadamia orchard is scheduled to start commercial production within 24 months.

On the subject of the stud ranch, work is underway to double the capacity following the purchase of an adjoining 1,000 hectare farm.

The Mavonde dam now has capacity to irrigate the ranch for four years, which will support “head to hectare” growth; the current stud breeding herd stands at 900 head, and the intention is to expand it to 2,500 head by the end of this year.

There was plenty of good news in other parts of the business, as well.

The maize milling operation at Compagri are operating close to full capacity and generating improved revenues, while strong initial trading is being seen at the Chimoio beef retail unit, with sales of $1,000 to $1,500 per day on an upward curve. The company is set to open its second beef retail unit this month.

Euan Kay, Agriterra Executive Director said, "The purchase of additional acreage in Mozambique provides a strong boost to our rapidly expanding beef operations, which are already producing significant revenues for the group.

“Turnover will be further enhanced by our new retail units, where initial daily sales of up $1,500 have been reported from our first shop in Chimoio.  In addition to this, group revenues will be further bolstered and diversified by the acquisition of a producing banana plantation and macadamia orchard.

With a strong development strategy in place to maximise the value potential of this new land, we are well set to enhance shareholder value and strengthen Agriterra's position as a pan-African agriculture business."

Africa-focused food group Agriterra (LON:AGTA) said initial indications for the first half of the 2012/2013 financial year looked “extremely encouraging”.

Chairman Phil Edmonds said: “Following periods of intensive investment over the past four years, the group has built a solid agricultural footprint in both Mozambique and Sierra Leone, and will benefit from a strong balance sheet moving forward, ensuring that we have all of the necessary resources to deliver on our growth objectives of building a significant pan-African agriculture business.”

Agriterra released most of its final figures for the year May in a trading update last month, though today’s final figures showed net assets of US41.4 mln compared to US$38.5 mln in October‘s update.

Despite a fall in demand in the grain business, initial revenues from the beef and cocoa operations resulted in turnover for the group increasing to US$13.8m (2011: US$13.6m).

Investment in building the beef and cocoa operations resulted in an increase in the reported loss on continuing activities after tax of US$6.9m (2011: US$2.3m), it said.

Agriterra is also waiting for the cash from the sale of its 20% legacy interest in an Ethiopian oil asset for US$40 million on completion and a further US$10 million on "Commercial Discovery."

It is also due a compensation payment of £11.4 mln as partial recompense for work undertaken and investment on Southern Sudanese oil asset.

Shares rose to 3.17p. 

Trading in the last three months had been considerably higher than a year ago the beef-herder said, reflecting heavy investment in all of its operations.

Over the past year it has increased the size of its herd to more than 4,800 cattle with 16,000 hectares of land providing room for expansion. The herd is targeted to reach 6,000 by the end of 2012.

Cocoa trading arm Tropical Farms Limited now has three main hubs and a direct buying register of 3,500 farmers. The company traded approximately 1,250 tonnes of cocoa and 75 tonnes of coffee during the year to May. 

The extra investment meant losses for the year rose to US$6.9 million (2011: US$2.1 million) on flat sales of US$13.8 million (2011: US$13.5 million).  As well as cattle ranching and cocoa trading, Agriterra also has maize and milling and palm oil divisions.

Assets at the year end rose by 55% to US$38.5 million (2011 :US$24.8 million) and recently Agriterra also agreed a sale of its legacy 20 per cent stake in the South Omo oil block in Ethiopia for up to US$50 million.

Andrew Groves, Agriterra's chief executive said: "We continue to make excellent progress building a long term sustainable agricultural and food production business, and now have three revenue streams from beef, grain and cocoa sales.

"We also anticipate two significant cash injections in the near future, firstly on completion of our agreement with Marathon Oil which will provide the group with an additional US$40 million before tax, followed by a compensation payment of £11.3 million in relation to work completed at the Block Ba oil concession.

The dramatic cash injections will provide Agriterra with a very healthy cash position which already underpins the valuation of the Company, but will also enable the execution of our rapid growth initiatives."

Partner Africa Oil said the figure was a best case, gross unrisked estimate derived from an independent review of the South Omo block in Ethiopia.

Agriterra has a 20 per cent stake in South Omo with Africa Oil owning 30 per cent and Tullow Oil (LON:TLW) 50 per cent. 

Sabisa-1, the first well planned for the South Omo Block, is now targeted to be drilled by the end of 2012, following Tullow's rig contract negotiations in Ethiopia, which are nearing conclusion, Agriterra added. 

South Omo is situated within the Tertiary age East African Rift just north of Lake Turkana, one of the last great rift basins to be explored in East Africa, said the company.  

Tullow has already made a discovery on Block 10BB in Kenya, which is located within the same petroleum system as South Omo.  

Seismic and gravity data from Africa Oil show robust leads and prospects throughout the South Omo Project area, Agriterra said.

Chief executive Andrew Groves added the results combined with successful drilling in the same petroleum system confirmed the high prospectivity of the concession.

He added he was also “extremely excited about the prospect of the first well being drilled by the end of the year“.

He added that with the agricultural and ranching businesses going from strength to strength there is the potential for a “great value uplift” at Agriterra.

It has received notice from the Ministry of Petroleum and Mining of the Republic of South Sudan that it is entitled to receive £11,372,682 following work carried out when it was formerly oil and gas explorer - White Nile Ltd.

It is for partial recompense for the work and investment made on the Block Ba oil concession area in Southern Sudan, and the money will be paid within one year. 

White Nile began exploring there in 2005, but in 2007 exploration work in the area was prohibited.

Agriterra says it has now called for a meeting with the authorities to try and speed up the payment.

The company pointed out that it also retains, as a legacy asset, a 20 per cent interest in the South Omo block in Ethiopia, which Tullow Oil and Africa Oil Corp have farmed into the development of.  

Initial results following drilling at block 10BB in Kenya, which is host to the same petroleum system as South Omo, have been highly positive, said the firm.

Chief executive of Agriterra, Andrew Groves said: "Our legacy oil assets are continuing to look extremely promising, with the South Omo block prominent in Tullow and Africa Oil east African exploration plans.  

"An £11 million cash payment from the South Sudanese, represents approximately 30 per cent of our current market capitalisation and further enhances our already strong balance sheet on a non dilutive basis."

Agriterra  (LON:AGTA) has taken an important step in developing its cocoa operations in Sierra Leone by acquiring a five acre site in Kenema, the country’s third largest city, in order to develop a processing and management facility.

Last month it set out ambitious plans for its Tropical Farms subsidiary, which will expand its cocoa operation to 40 locations from 12 currently.

Agriterra’s strategy is to become a leading buyer, trader and producer of high quality, sustainable and traceable cocoa in Sierra Leone.

The 2,000 square metre cocoa facility will be next to a dual carriageway, which is the main artery in and out of the cocoa growing region of the country.  

It will also house administrative and buying offices as well as vehicle maintenance facilities.  

The Africa-focused agricultural group also said it hopes to build a much larger state-of-the-art collateral management depot in the capital Freetown.

This will serve as the main hub within Sierra Leone, providing access to the international markets for all TFL’s commodities.

Negotiations to secure a 15-acre site in the new airport development zone are progressing, said Agriterra chief executive Andrew Groves. 

"Our efforts to build relationships with farmers across the country and increase our buying network are also progressing encouragingly,” he added.

“This is the backbone to the business so we are delighted to now be working with over 3,500 farmers and to be building our network of buying points with a target of achieving 40 buying points by the end of the year.   

“Additionally, we continue to assess our options to expand our commodity reach to include coffee and palm oil. 

"We remain highly confident about the future of TFL, particularly in light of the highly attractive economic fundamentals of the cocoa market, and believe that we are ideally positioned to build on our standing as a leading trader of high quality sustainable and traceable cocoa."

Agriterra is currently focused on the production and processing of maize in Mozambique, and rearing cattle.

It wants to be a “field to fork” operator across a number of sectors but focused on Africa, so cocoa, coffee and palm oil fit that bill.  

It has also made a bold and decisive move into logistics by signing a concession agreement to run and develop the port of Conakry in Guinea.

The 30 hectare site is a gateway for all sorts of exports from palm oil, cocoa, rice and livestock, through to industrial commodities such as iron ore and bauxite.

It said its prized beefmaster herd at Movonde totals 1,000 and is achieving US$1,100 per carcass.

A dam project near Movonde will increase the supply of water, therefore supporting the expansion programme. Meanwhile, land clearance at the Dombe Ranch will allow it to increase its capacity. 

Separately, the company’s abattoir at the Mozbife operation near Chimoio is on course to open in August 2012.

The company is acquiring a turnkey slaughterhouse and meat processing plant from the Netherlands. The decision to vertically integrate will make the whole meat business a far more profitable one.

Agriterra director Euan Kay said: “The continued development of our Vanduzi feedlot and abattoir at Chimoio, in addition to establishing butchers' shops, are the key final elements in our vertically integrated beef business, enabling Mozbife to benefit from the full uplift in value for slaughtered and butchered products. 

“With this in mind, as we move into the new financial year, I am confident that Mozbife will contribute a further high margin revenue stream, in addition to our maize and cocoa operations.  

“These, together with the palm oil operations which we are establishing in Sierra Leone, will substantially enhance Agriterra's financial performance and value accretion potential moving forward."

Agriterra’s staple business is processing maize in Mozambique, but it has branched out into cattle and has acquired the rights to the Port of Conakry in Guinea.

Its plans are to become a “field to fork” producer of beef, though it also wants to branch out into other livestock such as chickens and goats.

Last month it outlined plans to expand its Sierra Leone cocoa trading business Tropical Farms Limited to 40 locations this year from 12 currently as part of an aggressive growth strategy. TFL will also extend its focus into coffee and palm oil.

Negotiations are already underway to secure a 15-acre site in the new airport development zone close to the capital Freetown, while advanced discussions are also taking place to acquire a cocoa plantation in the south-east of the country.

The group is well financed to roll out its ambitious plans after raising US$15 million last year from investors at 3 pence a share.

As part of the strategy, TFL will also extend its focus into coffee and palm oil.

Negotiations are already underway to secure a 15-acre site in the new airport development zone close to the capital Freetown, while advanced discussions are also taking place to acquire a cocoa plantation in the south-east of the country.

The group is well financed to roll out its ambitious plans after raising US$15 million last year from investors at 3 pence a share.

Today’s announcement underlines the commitment to diversify its agricultural operations, which is currently focused on the production and processing of maize in Mozambique, and rearing cattle.

Agriterra wants to be a “field to fork” operator across a number of sectors but focused on Africa, so cocoa, coffee and palm oil fit that bill.  

It has also made a bold and decisive move into logistics by signing a concession agreement to run and develop the port of Conakry in Guinea.

The 30 hectare site is a gateway for all sorts of exports from palm oil, cocoa, rice and livestock, through to industrial commodities such as iron ore and bauxite.

Chief executive Andrew Groves said today: "Our cocoa buying and trading operation in Sierra Leone, TFL, is rapidly advancing its aggressive growth strategy to become a leading in-country trader of sustainable and traceable cocoa by the end of the year.  

“In line with this, it is focussed on building its direct buying register, securing a major new 15-acre management facility and acquiring a large cocoa plantation.  Having done the leg work and built its foundation and reputation, it is also looking to expand its commodity reach to include coffee and palm oil. 

"TFL's exciting business model provides a third revenue stream for Agriterra and complements our other agricultural businesses, which comprise maize farming and milling, the cattle ranching business which has reached 2,900-head, feedlot facilities and soon to be finished abattoir services and palm oil.” 

African agricultural firm Agriterra (LON:AGTA) enjoyed a “highly active” period during the year to May 31 with turnover increasing 55 per cent thanks to substantial organic growth in the firm’s beef and maize divisions.

Turnover increased to US$13.6 million during the year (2010: US$8.8 million) and total maize meal sales were up 56 per cent to 28,822 tonnes. The firm’s loss before tax reduced to US$2.2 million in 2011, compared with US$3.9 million in 2010.

Agriterra said that its strategy of becoming a vertically-integrated beef producer is progressing. At its Mozambican cattle ranching business, Mozbife, Agriterra said it had invested significantly during its 2011 financial year and continues to do so. This has translated into the growth of its total herd – which now stands at 2,350 despite temporary importing restrictions of cattle from South Africa.

The firm is in the process of constructing a dam at Mavonde, which will eventually facilitate the irrigation of up to 4,000 hectares of pasture, and it is investigation the possible acquisition of additional neighbouring land to add to its existing 16,000 hectares.

Agriterra said that the development of its integrated grain and beef businesses in Mozambique is progressing “extremely well” and that initial beef sales have been “exceptionally well received” locally in Mozambique, where demand can currently only be satisfied by imports.

Meanwhile, the first phase of Agriterra’s Vanduzi feedlot project has been completed, while the construction of an abattoir with a capacity of 4,000 head per month continues with commissioning expected in the second quarter of the current financial year.

After the end of its 2011 financial year, Agriterra made a move into the cocoa sector through the acquisition of Sierra Leone-based Tropical Farms.

These days you need the finely honed instincts of a commodity trader to guess on where rice, maize and wheat prices are headed. 

And of course there are also long-term geopolitical concerns to factor in, alongside the environmental issues that have dogged basic staples such as palm oil.

You put agriculture and Africa together and it conjures up visions of subsistence farming, or alternatively the large colonial tobacco, rubber and sugar plantations that helped bankroll the British empire.

What if I told you there is a thriving, African-focused agricultural story that defies stereotyping, is socially inclusive and has the cash to finance a fairly ambitious expansion plan.

Its name is Agriterra (LON:AGTA). Upfront I will point out that this is the company formally known as White Nile, which had a rather chequered past.

The legacy issues, such as they are, actually present two potential value kickers for investors, with no downside – as we will see later.

And the company as it stands today bears little resemblance to the business that existed five years ago, and which was hit by the volatile powder-keg that is South Sudanese politics. 

Agriterra turns over more than US$2 million a month processing maize in Mozambique, has branched out into cattle and has acquired the rights to the Port of Conakry in Guinea.

Its plans are to become a “field to fork” producer of beef, though it also wants to branch out into other livestock such as chickens and goats.

And, according to director Euan Kay, a major driving force behind the Agriterra business, we should also look out for a potential move into other agricultural commodities such as cocoa.

Agriterra’s is a unique approach. Maize is the company’s staple, as it is for Mozambique as a whole.

But instead of commandeering vast tracts of arable land, or levelling the local Miombo woodland to make way for factory farms, the AIM-listed company buys from the locals.

It owns the DECA facility in Manica Province, and the Compagri facility in Tete, around 220 miles due north.

DECA is processing around 50,000 tonnes a year and has storage for 40,000 tonnes of maize, which makes it a substantial operation.

Tete, meanwhile, endured some difficulties in its infancy, which was rectified by a three month closure of the operation and the removal and replacement of the local manager and 80 staff.

Whilst this move didn’t endear the board to the local government, the changes appear to have worked with Tete turning over around US$400,000 last month compared with just US$20,000 in November, while the government has remained very supportive of the group’s overall strategy. 

Total revenues for the two operations are rising and were US$2.1 million last month from US$1.45 million in December.

Agriterra buys the local produce at around US$170-200 a tonne and sells its processed as meal for US$400-$470 a tonne after transport storage and processing, which gives the company a decent though not extravagant gross profit margin.

One thing to note is that for every tonne of maize that is processed only 800 kilos comes out the other side as saleable meal.

The remainder, of course, is bran which is fit only for animal consumption. And this gives an indication of why the Agriterra identified beef as an attractive and complementary business.

It currently has 1,200 head of cattle and is importing South African Beefmaster, prized for its meat content, and which it is breeding with the hardy local bovine population.

A note though, all trade with South Africa is currently on hold after a foot and mouth outbreak there, though the ban should be lifted within three months.

Its breeding bulls have something approaching celebrity status with the local farmers as they are being used to impregnate the cattle of local small-holders.

This is not just good public relations with patriarchs of rural Mozambique, it is also good business.

For once the abattoir at the Mozbife operation, near Chimoio, is up and running, in 2012 it will be processing local livestock to “beef up” production.

The company is acquiring a turnkey slaughterhouse and meat processing plant from the Netherlands for around 3 million euros. 

The decision to vertically integrate will make the whole meat business a far more profitable one.

“Our vision is field to fork,” says Kay.  “At the moment we don’t have an abattoir and we have been selling through a butcher who slaughters it and sells the meat at four times what he pays us for it.”

Eventually the company will have the capacity to slaughter around 200-240 head of cattle a day, though currently it just doesn’t have the livestock to do that.

There is a ready domestic beef market provided by an influx of workers from Brazil and Australia drawn to Mozambique’s massive mining projects.

As I said, other livestock such as chicken may be next on the agenda, and potentially goats, the preferred meat of the local population.

The group is also looking at other projects, including cocoa.  Kay can barely disguise his enthusiasm for developing a cocoa project, although he’s coy on exact details.

“We are looking to get into the cocoa business in a fairly big way and are evaluating opportunities in west Africa,” is all he says. 

Agriculture is just one leg of the business. Last month the group made a bold and decisive move into logistics by signing a concession agreement to run and develop the port of Conakry in Guinea.

The 30 hectare site is a gateway for all sorts of exports from palm oil, cocoa, rice and livestock, through to industrial commodities such as iron ore and bauxite.

The development of such a major port could represent a major financial undertaking but it is envisaged that it will be project financed and Kay assures me he won’t be back to the market for cash unless “a very, very big plum lands in our lap”.

The key to Conakry’s advancement may lie in the fact that Agriterra has been approached by a number of potential partners interested in running the port.

“We will be assisted by the people who come in,” Kay says, again not giving too much away.  “We’ve got the licences, and got the concession. It could be very valuable.”

As I said earlier, here’s a company that’s fully cashed up and able to fund its investment plans for the foreseeable future.  A placing last November means it has between US$7-US$9 million in the bank as well as US$5-US$6 million in working capital plus maize in stock in Mozambique itself.

There are of course some legacy issues from the old White Nile business – but they are positive.

The first hangover is a 20 per cent holding in the South Omo Block in Ethiopia, where it receives a free carry to the drilling phase. 

Tullow now has a 50 per cent stake in South Omo, with Canada’s Africa Oil Corporation holding the remaining 30 per cent. 

The block has some promising geology. It is within the tertiary age East African Rift and in the same petroleum system as Africa Oil’s Kenya Block 10BB and Tullow’s Ugandan discoveries.

Meanwhile, Agriterra’s chairman Phil Edmonds, the former England spin bowler and serial entrepreneur, is excited about Tullow’s involvement. 

“This is a significant step towards accelerating exploration on the South Omo Block, which will be guided by a leading E&P company with extensive practical experience of operating in Africa,” he said earlier this week.

“Tullow has an exceptional technical and operational track record, with an excellent success rate in regard to exploration. 

“This expertise has been demonstrated by Tullow's successful development of its Ghanaian and Ugandan blocks, and I believe that this experience, which includes expertise in the East African Rift Basin, presents Tullow as an extremely attractive operator to drive exploration on the concession.”

The Tullow farm-in was concluded in December and signed off by Ethiopia’s Ministry of Mines on February 22.

The other potential value kicker is compensation the company might receive for Block Ba in South Sudan.  As nothing has been agreed it is hard to say how much this will be.

Broker Matrix reckons the company will be loss-making all the way out to 2013, though this is based on some fairly conservative growth assumptions.

Analyst Tom Plinston is it would seem a little more aggressive in his valuation of the shares which he reckons are worth around 7.1 pence each (current price 3.5 pence) based on his 16-year discounted cashflow model.

“We believe the market is significantly underestimating both the value opportunity the current investment programme is set to create and the level of risk associated with this business,” he told clients in a recent research note.